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It is typical practice for employers to access agreements with their particular employees to start an employer and employee relationship. Agreements are commonly put in writing by the actual employer incorporating terms, which both the particular employer and employee mutually agree with first as a standard form or negotiated terms between the parties. Surprisingly there are usually many employers who enter into verbal agreements with employees and do not finalise the conditions of employment directly into written form, or an job contract.

Over time any business’ operations and employee’s responsibilities may change, however these changes don’t be incorporated into verbal or composed contracts. This often results in employers and employees subjected to uncertainty and potentially legal exposure.

Written employment contracts allow for the terms of employment being clear and unambiguous to ensure both parties know and understand their particular responsibilities, duties and obligations under the agreement from the commencement of employment until it is either amended or even terminated. These contracts are referred to as common law employment contracts.

Common law employment contracts are not “industrial instruments” unlike Australian Workplace Contracts (AWAs), Awards and Notional Agreements Preserving State Awards (NAPSAs).

A common legislation employment contract may operate simultaneously having an AWA, however employers need to remember that common regulation contracts cannot undercut the terms of your industrial instrument.

If you utilize common law contracts within your business it is imperative that you ensure all the actual terms or any relevant industrial device are carefully observed.

A restraint associated with trade clause seeks to impose limits or restrictions on an employees’ conduct when they leave employment. Restraints of industry clauses are meant to protect an employer’s reputable business interests and goodwill. There will always be two competing pursuits, an employees’ freedom to earn a living against the need of your employer to protect its legitimate company interest.

Employers need to remember that restraint associated with trade clauses will simply be valid when they are reasonable under relevant Restraints associated with Trade Legislation within each state as well as territory. In New South Wales; what is reasonable beneath the Restraints of Business Legislation 1976 (NSW) is determined by factors including:

The subject matter with the restraint.

The time and section of its operation.

The nature with the employer’s business and also the industry when the employer operates.

The relationship from the employee to the employer’s clients and also customers.

The nature from the work performed by the employee.

A properly drafted restraint of trade clause in an employment contract with an employee is an efficient tool to protect an employer’s legitimate interests and it is capable of enforcement where it can be established that an employee deliberately copied consumer lists or company records before leaving behind employment and did so using the intent to be competitive against their company. An employee may be restrained from continuing to activate in conduct in breach of their obligations under a work contract and damages may be awarded to the employer particularly circumstances.

Restraint clauses can be quite a useful means associated with protecting legitimate enterprise interests however employers should consider that determining the right scope and software of valid restraint clauses is usually complex and difficult and legal services should be searched for.